SSA - POMS: GN 00501.012 - Determining the "Rep Payee Type" of an Applicant or Payee

A. Why Rep Payee Type is important

"Rep Payee Type" indicates whether a representative payee (payee) is an individual or an organization. It is an important factor in a payee's relationship with a beneficiary. This relationship can be important in determining the suitability of a payee applicant and affects how we monitor a payee's performance. Rep Payee Type affects the "Type of Payee" relationship and the "Payment Legend."

We record the Rep Payee Type code of "Individual" or "Organization" on the Master Beneficiary Record (MBR), on the Supplemental Security Record (SSR), and in the Representative Payee System (eRPS).

Rep Payee Type is the basis for whether the identifier in eRPS is either a Social Security Number (SSN) for an individual, or an Organization ID, along with Employer Identification Number (EIN), for an organization (GN 00502.112).

B. Identifying Rep Payee Type

Identifying the Rep Payee Type is generally simple. However, there are uncommon situations where a payee that appears to be a business is actually an individual, not an organization. Conversely, a business with a single owner and no employees may still qualify as an organizational payee. The business structure of the payee determines whether it should be classified as an individual or organizational Rep Payee Type.

NOTE:

Contact the FO manager with any questions about EIN, organization name, or business structure, see GN 00502.118.

1. Individual

An individual applicant or payee is generally a person applying or serving as payee based on their personal relationship with the beneficiary, such as a parent, spouse, or child.

Sole proprietorship, general partnership, or limited partnership: With businesses owned by individuals that are sole proprietorships, general partnerships, or limited partnerships, identify the payee as an individual. These business structures do not provide liability protection; therefore, we treat these as individuals because we can hold the owners personally liable for the business’s debts. Checking a state’s business registry can assist in determining a payee’s business structure. While we require all organizational payees to have an employer identification number (EIN), some sole proprietorships, general partnerships, and limited partnerships may also have EINs.

NOTE:

If an individual payee has a business, conduct a search in eRPS in case any erroneous organizational payee record of that business should be corrected. If there is a record of misuse by the organization, see the NOTE in GN 00604.061C.5.

Example:

Gardein Guardians is a small business providing guardianship services for several beneficiaries. The owner, Sheila Gardein is applying to be payee for the beneficiaries. Sheila’s previous employer, Local Legal Associates, provided funding for Gardein Guardians, and Sheila calls them her “silent partner,” because Local Legal Associates has no active role in the business operations. Gardein Guardians has two employees, and the guardianship paperwork shows that Gardein Guardians has an EIN. The field office (FO) technician asks Sheila whether the business is incorporated or registered as an LLC. Because Sheila never filed with the State to incorporate the business, the FO technician chooses the “Individual” Rep Payee Type on the eRPS application Introduction screen. The FO technician adds a Rep Payee Applicant note (MS 07415.002) to keep a record of the business name and EIN.

2. Organization

An organizational applicant or payee is a corporation, institution, agency, or other organizational entity. Applicants apply as agents, representatives, or officials of organizations. eRPS uses the organization’s ZIP Code plus a sequence number to create the Organization ID unique identifier. FO managers record and verify the organization's EIN in eRPS. If a payee or applicant claims the business is incorporated, but it does not have an EIN in the EIF (see MS 05205.004 EIF Access (AEQY)), does not appear to be incorporated, or has a name that does not match the EIF record, the FO manager requests IRS documentation or other documentation that shows the business is incorporated or otherwise legally registered with the State, per GN 00502.118.

a. Entities with limited liability

Certain business structures separate a business from the individuals who own and operate it. Establishing businesses in this way provides the owners with limited liability, i.e., the individual owners are protected from personal liability for the debts of the business. For corporate entities, this process is known as incorporation. For other entities with business structures such as limited liability companies (LLCs) or limited liability partnerships (LLPs), the process is simply called formation. FO managers code entities with limited liability as organizations in eRPS, see GN 00502.112. The EIN is the tax ID for IRS purposes and may be needed for debt collection procedures.

These organizational payees include:

•

corporations (whose names often end with “Inc.,” “Corp.,” or “Ltd.”),
•

non-profit corporations,
•

religious organizations,
•

professional associations (whose names often end with “P.A.” or “P.C.”),
•

cooperatives,
•

limited liability companies (LLCs, including LLCs with only one business owner), and
•

limited liability partnerships (LLPs).

b. Federal, State, and local government entities

Government agencies include organizations, such as VA hospitals, departments of social services, and state foster care agencies.

C. Type of Payee

“Type of Payee” describes the relationship between the payee and beneficiary, see GN 00501.013 Explanations for Types of Payees:

•

For an individual payee, Type of Payee describes the family or other relationship of the payee to the beneficiary, such as father, spouse, or other relative, see MS 07409.005F.
•

For an organization, Type of Payee generally describes the organization, such as social agency or privately owned mental institution, see MS 07414.006E.

D. Payment Legend

The "Payment Legend" should accurately reflect whether the payee is an individual or an organization. When the payee is an individual, the legend should include the individual's name. When the payee is an organization, the legend must include the business name. If the individual or organization has established a Doing Business As (DBA) name, include that in the legend.

If a sole proprietor or partner is an individual payee, and the individual insists that the payments be issued to the business name, honor the request by recording the business name on the eRPS Payment Legend screen (MS 07411.006). Enter all other data as for an individual payee (use the owner's SSN and individual Rep Payee Type).

E. Reference

SM 00613.000 Miscellaneous Corrections (MISOR) Subchapter Table of Contents

GN 00502.112 Identifiers for the eRPS

Social Security

Program Operations Manual System (POMS)

GN 00501.012 Determining the "Rep Payee Type" of an Applicant or Payee